Federal Circuit Clarifies Patent Term Adjustments

The Federal Circuit ruled last week that the Patent Office had incorrectly calculated the patent term adjustments for patents owned by Novartis and opened the door to longer patent terms.

35 U.S.C. § 154 provides for patent term adjustments if, save for certain limitations, an application is pending before the PTO for more than three years.  One of the limitations is found in § 154(b)(1)(B)(1), which excepts from the three-year calculation the time consumed by continued examination.

In the case of Novartis’s patents, in calculating the patent term adjustment, the PTO excluded from the three-year calculation all time after the onset of continued examination.  Novartis AG v. Lee, No. 2013-1160 (Fed. Cir. 2014).  The PTO’s calculation excluded the time between allowance and issuance, even though this time would have been included for a non-continued examination.  The Federal Circuit overturned the PTO’s ruling, holding that the “time consumed by continued examination” should include only the period from onset of continued examination to allowance.  The time between allowance and issuance should be included in the three-year calculation, according to the Federal Circuit’s ruling.

The Federal Circuit’s decision opens the door to increased patent term adjustments for a number of patents.  Because patent applicants have three months after notice of allowance to pay the issuance fee, this ruling has the potential to add months to the terms of patents that were the subject of continued examination.  This could have a particularly forceful impact for pharmaceutical patent holders, where any additional patent term adds to the time in which generics are excluded from the market.